Exhibit 10.3


 


 


 


SECURITY AGREEMENT


 


THIS
SECURITY AGREEMENT (this "Agreement"), is entered into as of November
15, 2018, by and between Ozop Surgical Corp., a Nevada corporation (the "Borrower"),
and Auctus Fund, LLC, a Delaware limited liability company (the "Secured Party" or "Secured Parties").
All capitalized terms not otherwise defined herein shall the meanings ascribed to them in that certain Securities Purchase Agreement
and Note (as defined below) by and between Borrower and the Secured Party of even date (the "Securities
Purchase Agreement").


 


RECITALS


 


WHEREAS,
the Secured Parties have loaned monies to Borrower, as more particularly described in the Securities Purchase Agreement and as
evidenced by the 8% senior secured convertible promissory note in the principal amount of $500,000.00 (the “Note”)
issued by Borrower to the Secured Party on November 15, 2018;


 


WHEREAS,
the term "Secured Party" as used in this Agreement shall mean, collectively,
all holders of the Note, including those persons who become holders of Note subsequent to the date hereof; and


 


WHEREAS, this Agreement
is being executed and delivered by Borrower to secure the


Note.


 


NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the parties
hereto hereby agrees as follows:


 


1.
Obligations Secured. This Agreement secures, in part, the prompt payment and performance of all obligations of Borrower
under the Note, and all renewals, extensions, modifications, amendments, and/or supplements thereto (collectively, the "Secured
Obligations").


 


2. Grant of Security.




 


a.
Collateral. Borrower hereby grants, pledges, and assigns for the benefit of the Secured
Parties, and there is hereby created in favor of each of the Secured Parties, a security interest in and to all of Borrower' s
right, title, and interest in, to, and under all of the collateral set forth on Exhibit A hereto (collectively, "Collateral").


 


b.
Effective Date. This grant of security shall be effective as of the date hereof.


 


c.
Subordination. The Note and the Secured Obligations shall not be subordinated, or
junior in interest, to any other obligations of Borrower.


 


d.
Filings to Perfect Security. The Company will (and is hereby authorized to) file
with any filing office such financing statements, amendments, addenda, continuations, terminations, assignments and other records
(whether or not executed by Borrower) to perfect and to maintain perfected security interests in the Collateral by the Secured
Parties, whereby (a) promptly upon the execution of this Agreement, a Financing Statement on Form UCC-1
(the "Financing Statement'') shall be filed with the Nevada Secretary of State
on behalf of the Secured Parties with
respect to the Collateral; The Financing Statement shall designate each of the Secured Parties as a Secured
Party and Borrower as the debtor, shall identify the security interest in the Collateral, and contain any other items required
by law.


 


e.
Release of Security Interest. The security interest granted pursuant to this Agreement
shall automatically terminate upon the effective date of a Form S-1 registering the common stock of the Borrower issuable to the
Secured Party pursuant to the conversion of the entire Note. 


 


The Financing Statement
shall contain a description of collateral consistent with the description set forth herein.


 


3.
Transfers and Other Liens. Except as set forth herein or in the Note, Borrower shall
not, without the prior written consent of all of the Secured Parties, at their sole
and absolute discretion:


 


a.
Sell, transfer, assign, or dispose of (by operation of
law or otherwise), any of the Collateral outside of the ordinary course of business;


 


b.
Create or suffer to exist any lien, security interest, or other charge or encumbrance
upon or with respect to any of the Collateral, except the security interests created hereby; or


 


c. Permit any of the Collateral
to be levied upon under any legal process.




 


4.
Representations and Warranties. Borrower hereby represents and warrants to the Secured
Parties as follows: (a) to Borrower' s knowledge, Borrower is the owner of the Collateral (or, in the case of after-acquired Collateral,
at the time Borrower acquires rights in the Collateral, will be the owner thereat) and that, except as expressly provided herein,
no other person has (or, in the case of after-acquired Collateral, at the time Borrower
acquires rights therein, will have) any right, title, claim or interest (by way of Lien or otherwise) in, against or to the Collateral;
(b) to Borrower's knowledge, except as expressly provided herein, upon the filing of a Financing Statement with the Nevada Secretary
of State, the Secured Parties (or in the case of after-acquired Collateral, at the
time Borrower acquires rights therein, will have) will have a perfected security interest in the Collateral to the extent that
a security interest in the Collateral can be perfected by such filing; (c) all Accounts
Receivable (as defined in Exhibit A) are genuine and enforceable against the party obligated to pay the same; (d)
Borrower has full power and authority to enter into the transactions provided for in this Agreement and the Note; (e) this
Agreement and the Note, when executed and delivered by Borrower, will constitute the legal, valid and binding obligations of Borrower
enforceable in accordance with their terms; (t) the execution and delivery by Borrower of this Agreement and the Note and the performance
and consummation of the transactions contemplated hereby and thereby do not and will not violate Borrower's Certificate of Incorporation
or Bylaws or any material judgment, order, writ, decree, statute, rule or regulation
applicable to Borrower (g) there does not exist any default or violation by Borrower of or under any of the terms, conditions or
obligations of (i) any indenture, mortgage, deed of trust, franchise, permit, contract,
agreement, or other instrument to which Borrower is a party or by which Borrower is bound, or (ii) any law, ordinance, regulation,
ruling, order, injunction, decree, condition or other requirement applicable to or imposed upon Borrower by any law, the action
of any court or any governmental authority or agency; and the execution, delivery and performance of this Agreement will not result
in any such default or violation; (h) there is no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand pending or, to the knowledge of Borrower, threatened which adversely affects Borrower' s business or financial condition
and there is no basis known to Borrower for any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand which could result in the same; and (i) this Agreement and the Note do not
contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements contained
in this Agreement and the Note not misleading.


 


5.
Events of Default. For purposes of this Agreement, the term "Event
of Default" shall mean and refer to any of the following:


 


		a.	Failure of Borrower to perform or observe
any covenant set forth in this Agreement, or to perform or observe any other term, condition, covenant, warranty, agreement
or other provision contained in this Agreement, where such failure continues for fifteen (15)
days after receipt of written notice from Lender specifying such failure;



 


		b.	Any representation or warranty made or furnished
by Borrower in writing in connection with this Agreement and the Note or any statement or representation made in any certificate,
report or opinion delivered pursuant to this Agreement or in connection with this Agreement is false, incorrect or incomplete in
any material respect at the time it is furnished; or



 


		c.	Occurrence of any other Event of Default as defined
in the Note.



 


6.
Remedies. Upon the occurrence and during the continuance of an Event of Default
(subject to the notice and cure provisions provided for herein, if any), each Secured Party
shall have the rights of a secured creditor under the Uniform Commercial Code of the applicable jurisdiction, all rights
granted by the Note, this Security Agreement and by law, including the right to require Borrower to assemble the Collateral and
make it available to the Secured Parties at a place to be designated by Borrower.
The rights and remedies provided in this Agreement and the Note are cumulative and may be exercised independently or concurrently,
and are not exclusive of any other right or remedy provided at law or in equity. No failure to exercise or delay
by the Secured Parties in exercising any right or remedy under this Agreement
or the Note shall impair or prohibit the exercise of any such rights or remedies
in the future or be deemed to constitute a waiver or limitation of any such right or remedy or acquiescence therein. Every right
and remedy granted to the Secured Parties under this Agreement and the Note or by
law or in equity may be exercised by any Secured Party at any time and from time to time.


 


7. Further Assurances. Borrower
agrees that, from time to time, at its own expense, it will:




 


		a.	Protect and defend
the Collateral against all claims and demands of all persons at any time claiming the same or any interest therein, and
preserve and protect Secured Party's security interest in the Collateral.



 


		b.	Promptly execute and deliver to Secured Parties
all instruments and documents, and take all further action necessary or desirable, as any Secured Party may reasonably request
to (i) continue, perfect, or protect any security interest granted or purported to be granted hereby, and (ii) enable a Secured
Party to exercise and enforce any of Secured Party's rights and remedies hereunder with respect to any Collateral.



 


		c.	Permit a Secured Party's
representatives to inspect and make copies of all books and records relating to the Collateral, wherever such books and
records are located, and to conduct an audit relating to the Collateral at any reasonable time or times.



 


8.
Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed telex, e-mail or facsimile if sent during normal business
hours of the recipient, if not, then on the next business day, (c) five (5) days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (d) one (1)
day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification
of receipt. All communications shall be sent as follows:


 
If to the Borrower, to:


 


Ozop Surgical Corp.


319 Clematis Street, Suite 714


West Palm Beach, FL 33401


Attn: Michael Chermak


E-mail: info@ozopsurgical.com



 


If to the Secured Party:


 


Auctus Fund, LLC


545 Boylston Street, 2nd Floor


Boston, MA 02116


Attn: Lou Posner


Facsimile: (617) 532-6420


 


or to such other address or telecopy number
as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith.


 


10.
Amendments and Waivers. No modification, amendment or waiver of any provision
of, or consent required by, this Agreement, nor any consent to any departure herefrom, shall be effective unless it is in writing
and signed by each of the parties hereto. Such modification, amendment, waiver or consent shall be effective only in the specific
instance and for the purpose for which given.


 


11.
Exclusivity and Waiver of Rights. No failure to exercise and no delay
in exercising on the part of any party, any right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege preclude any other right, power or privilege. The rights and
remedies herein provided are cumulative and are not exclusive of any other rights or remedies provided by law.


 


12.
Invalidity. Any term or provision of this Agreement shall be ineffective to the extent
it is declared invalid or unenforceable, without rendering invalid or enforceable the remaining terms and provisions of this Agreement.


 


 


13.
Headings. Headings used in this Agreement are inserted for convenience only and shall
not affect the meaning of any term or provision of this Agreement.


 


14.
Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original instrument, but all of which collectively shall constitute one and the same agreement.


 


15.
Assignment. This Agreement and the rights and obligations hereunder shall not be
assignable or transferable by the any of the parties without the prior written consent of all Secured Parties, at their sole and
absolute discretion.


 


16.
Survival. Unless otherwise expressly provided herein, all representations warranties,
agreements and covenants contained in this Agreement shall survive the execution hereof
and shall remain in full force and effect until the earliest to occur of (a) the payment
in full of the Note, and (b) the conversion of the principal and accrued and
unpaid interest and all other amounts owing under the Note into common stock of Borrower.


 


17.
Miscellaneous. This Agreement shall inure to the benefit of each of the parties hereto
and all their respective successors and permitted assigns. Nothing in this Agreement
is intended or shall be construed to give to any other person, firm or corporation any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained.


 


18.
GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEVADA (WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF
LAWS PROVISIONS).


 


19.
CONSENT TO JURISDICTION.
Any action brought by either party against the other arising out of or related to this
agreement shall be commenced only in the state or federal courts of general jurisdiction located in the Commonwealth of Massachusetts,
except that all such disputes between the parties shall be subject to alternative dispute resolution through binding arbitration
at the Holder’s sole discretion and election (regardless of which party initiates the legal proceedings). 


 


20.
WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THISAGREEMENT. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND EACH OF THE OTHER PARTIES HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 20.


 


21. Attorneys'
Fees. In the event that any suit or action is instituted to enforce any provision in this Agreement, the prevailing party
in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such
prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys
and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.


 


22.
Entire Agreement. This Agreement contains the entire agreement among the parties
with respect to the transactions contemplated by this Agreement and supersedes all prior agreements or understandings among the
parties with respect to the subject matter hereof.


 


[SIGNATURE PAGE(S) FOLLOW]


 


 






    	 	 	 



     


    

IN WITNESS WHEREOF, this Security Agreement has
been executed as of the date first set written above.


 


 


Ozop
Surgical Corp.


 


 


By: ________________________________


Name: Michael Chermak


Title: Chief Executive Officer


 


 


 


AUCTUS FUND, LLC


 


 


By: ______________________________________


Name: Lou Posner


Title: Managing Member




    	 



    	 



    

EXHIBIT
A


COLLATERAL


Borrower
hereby grants, pledges, and assigns for the benefit of each Secured Party, and there is hereby created in favor of the Secured
Parties, a security interest in and to all of Borrower's right, title, and interest in, to, and under all assets and all personal
property of Borrower and its subsidiaries, whether now or hereafter existing, or now owned or hereafter acquired, including but
not limited to the following (collectively, "Collateral"):


 


1.
All accounts, chattel paper, contracts, contract rights, accounts receivable, tax refunds, Note receivable, documents, other choses
in action and general intangibles, including, but not limited to, proceeds of inventory and returned goods and proceeds from the
sale of goods and services, and all rights, liens, securities, guaranties, remedies and privileges related thereto, including the
right of stoppage in transit and rights and property of any kind forming the subject matter of any of
the foregoing ("Accounts Receivable");


 


2.
All time, savings, demand, certificate of deposit or other accounts in the name of Borrower
or in which Borrower has any right, title or interest, including but not limited to all sums now or at any time hereafter on deposit,
and any renewals, extensions or replacements of and all other property which may from time to time be acquired directly or indirectly
using the proceeds of any of the foregoing;


 


3.
All inventory and equipment of every type or description wherever located, including, but
not limited to all raw materials, parts, containers, work in process, finished goods,
goods in transit, wares, merchandise furniture, fixtures, hardware, machinery, tools, parts, supplies, automobiles, trucks, other
intangible property of whatever kind and wherever located associated with the Borrower's business, tools
and goods returned for credit, repossessed, reclaimed or otherwise reacquired by Borrower;


 


4.
All documents of title and other property from time to time received, receivable or otherwise
distributed in respect of, exchange or substitution for or addition to any of the foregoing including, but not limited to, any
documents of title;


 


5.
All know-how, information, permits, patents, copyrights, goodwill, trademarks, trade
names, licenses and approvals held by Borrower, including all other intangible property of Borrower;


 


6.
All assets of any type or description that may at any time be assigned or delivered to or
come into possession of Borrower for any purpose for the account of Borrower or as to which Borrower may have any right, title,
interest or power, and property in the possession or custody of or in transit to anyone for the account of Borrower, as well as
all proceeds and products thereof and accessions and annexations thereto; and


 


7.
All proceeds (including but not limited to
insurance proceeds) and products of and accessions and annexations to any of the foregoing.